America’s Middle Class Is Dangling Without a Safety Net
Two newspaper stories from last week said a lot about the state of the inequality debate in America. Last Wednesday, the New York Times reported on research showing that it is “Harder for Americans to Rise From Lower Rungs.” For all the talk of opportunity in our country, the truth is that people here are less likely to rise from the socioeconomic class of their parents than residents of other advanced industrial nations.
Meanwhile, the Wall Street Journal printed an article that embodies the conservative response to complaints about bonuses for bankers and excessive pay for CEOs. The article, entitled “The Rise of Consumption Equality,” argues that the America middle class is able to enjoy many of the same luxuries as the wealthy — in the form of inexpensive flat-panel TVs and tricked-out smart phones. A rising tide lifts all consumers’ boats, argues the article’s author, former hedge fund manager Andy Kessler.
The gulf between the two articles represents a dysfunctional public debate that we are having. Often, the dispute between left and right on the issue of inequality devolves into a game of competing statistics. The right deploys one set of numbers and the left counters with its own. We are not talking to each other; we are talking past each other. We need to get beyond this.
The reason why the message of the Occupy movement has struck a chord with so many people is that it touches on an issue that goes beyond the standing of America’s “top 1%.” People are not merely resentful that a few at the top have done well in our economy. Nor do they believe that the middle class is now living it abject poverty. Yet they are aware that ordinary working families are experiencing extreme vulnerability. The institutions that created stability in the past have disappeared.
In other words, the real complaint is not inequality but insecurity: The American middle class is now dangling without a safety net.
There are three ways in which the net has been severed.
First, public services that previously helped people recover from periods of economic downturn have been eliminated — or are in danger of being cut. We know that fluctuations in the business cycle are inevitable. Our economy has boom times and bust times. They question is, how is the risk and the pain of the cyclical system distributed? And how can we cushion the fall in times of economic downturn so that people who are thrown out of work or who are hit with an illness in their family do not permanently lose their position in America’s middle class? Our country’s social spending is critical for this reason — it allows people to bounce back. Yet, increasingly, we have an economy in which a single setback can affect a family for generations. As the New York Times notes, “The United States maintains a thinner safety net than other rich countries, leaving more children vulnerable to debilitating hardships.”
Second, in the private sector, a key support for the American middle class used to come in the form of collective bargaining. By getting together with their co-workers to negotiate with management, workers previously created a mechanism through which rising productivity would result in rising wages. But in recent decades, as unions have been decimated, that linkage has been snapped. People are finding themselves in a situation in which working hard and playing by the rules does not ensure that they will succeed — that they will have a home, be able to send their kids to school, have a reliable way to get to work, and have enough financial security that missing one or two paychecks will not send them into bankruptcy. Collective bargaining made that decent standard of living possible. And the disappearance of unions has contributed to the precariousness so many people now experience.
Third, related to this, savings have disappeared. If you factor in wealth, rather than just income, we are not only talking about a huge gap between the 99% and the top 1%. The gap is far more pronounced: The super-rich in the top .01% has isolated itself in its own world of extreme privilege. Meanwhile, middle class families no longer have enough in the bank to buffer themselves in times of temporary unemployment or other setbacks. They’re not angry that others have done well. They’re angry that they have been forced to shoulder the entire burden of risk and vulnerability in our economy, while those at the very top have made themselves “too big to fail.”
Both the Tea Party and the Occupy movement can be seen as responses to this new vulnerability. That middle class families might have high-definition TVs in their homes or late-model iPhones in their pockets does not change the fundamental insecurity they feel.
In the New York Times, Stuart Butler of the Heritage Foundation argued, “If America is so poor in economic mobility, maybe someone should tell all these people who still want to come to the U.S.” He’s right. America is a great country, and our standard of living still looks wonderful to those in poorer nations. But all those who believe in the greatness of our country — right or left — should not be willing to measure our economic health in relationship to the developing world. And they should recognize that something is broken when so many of our families are just one misstep away from tragedy.
That widespread feeling of insecurity is something not usually reflected in the competing sets of numbers about inequality, but it is registering loud and clear in the social movements that are growing in our streets.
— Amy Dean is a fellow of the Century Foundation and co-author, with David Reynolds, of A New New Deal: How Regional Activism Will Reshape the American Labor Movement. She worked for nearly two decades in the labor movement and now works to develop new and innovative organizing strategies for social change organizations in progressive, labor, and faith communities. You can follow Amy on Twitter at @amybdean, or she can be reached via www.amybdean.com.